US Stock Market Overview – Stocks Slump on Revisions to Jobs Data

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Updated: Aug 4, 2019, 07:43 UTC

Berkshire posts solid Q2 financial results

US Stock Market Overview – Stocks Slump on Revisions to Jobs Data

Stock prices moved lower on Friday in the wake of the US jobs report. US jobs came out in line with expectations. Downward revisions to both May and June weighed on US yields pushing the 10-year benchmark treasury down to 1.84%. This is the lowest level seen in the 10-year yield since September of 2016. While the labor force remains solid and the number of people looking for jobs has increased, there are chinks in the armor of the US economy. Traders are now concerned that heightening tensions over the US China trade dispute will push the US economy into recession. US manufacturing data that was released on Thursday showed a robust decrease in manufacturing sentiment. All sectors were lower, led down by technology and energy, utilities were the best performer in a down tape.

Jobs Data was Mixed

US jobs increased by 164,000 in July, in line with expectations but revisions reduced job growth in May and June by 41,000. That took the three-month average to 140,000 job gains, well off the 200,000-plus levels of last autumn. Wages rose 0.3% in July, or 3.2% year over year, and June wage growth was revised higher to the same level. May’s total nonfarm payrolls were revised down to 62,000 and June job creation was trimmed by 31,000 to 193,000. Health-care hiring in July rose 30,000 while professional and technical services added 31,000. Computer systems design and related services rose by 11,000 jobs and was responsible for about a third of employment gains in professional and technical services in July and during the year.

Manufacturing jobs grew at a better-than-expected pace of 16,000 in a sector that has been feeling the impact of trade conflicts. Hours worked in the sector however, fell by three-tenths to 40.4, the lowest since July 2011. The jobs report was viewed as mostly positive, with a pickup in labor participation to 63%, its highest since March, and the total labor force rising to 163.4 million, setting a record high.

Berkshire Posts Solid Earnings

Berkshire Hathaway reported Q2 earnings that increased due to unrealized investment gains, while the company’s cash pile grew to a record. Berkshire reported Q2 net earnings of $14 billion, or $8,608 per Class A share equivalent, from $12 billion, or $7,301 a share, in the year-earlier period. Operating earnings, which exclude some investment results, fell to $6.1 billion from $6.9 billion in the year prior. Berkshire bought back about $440 million of its shares in the Q2. Berkshire changed its buyback policy last year, and some shareholders have said they would like the company to spend significantly more cash repurchasing its stock.

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David Beckerauthor

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.